Simplicity Marketing: End Brand Complexity, Clutter, and Confusion

Simplicity Marketing

End Brand Complexity, Clutter, and Confusion

Steven M. Cristol

Peter Sealey

THE FREE PRESS

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Copyright © 2000 by Steven Cristol and Peter Sealey

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Designed by Brady McNamara

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10  9  8  7  6  5  4  3  2  1

Figure 4.1, the iMac advertisement, is reproduced with permission from Apple Computer, Inc., and TBWA/Chiat/Day.

Figure 10.1, the brand equity diagram, is adapted from Managing Brand Equity by David A. Aaker, © copyright 1991 by David A. Aaker. Reprinted by permission.

Library of Congress Cataloging-in-Publication Data

Cristol, Steven M.

Simplicity marketing: end brand complexity, clutter, and confusion / Steven M. Cristol, Peter Sealey.

   p.  cm.

Includes bibliographical references and index.

1. Marketing.

2. Customer relations—Technological innovations.

I. Sealey, Peter.

HF5415.C6993 2000

658.8—dc21

00-042188

ISBN 0-684-85918-1

ISBN-13: 978-0-684-85918-7

eISBN: 978-0-743-21568-8

To Elaine and Steffie, my anchors in the wind.

—Steven M. Cristol

To Donald R. Keough, retired president of The Coca-Cola Company, and Peter F. Drucker, Clark Professor of Social Science at the Claremont Graduate University, for their seminal contributions to the discipline of management and great inspiration to me.

—Peter Sealey

Contents

Acknowledgments

Introduction

PART I The Buying and Selling Environment in the Digital Age

1. Too Much Choice

2. Becoming Part of the Solution

3. The 4 R’s of Simplicity Marketing

PART II Strategies: Applying the 4 R’s for Competitive Advantage

4. Replace: Substitution and Consolidation

5. Repackage: Aggregation and Integration

6. Reposition: Simplifying the Customer’s Brandscape

7. Replenish: Continuous Supply, Zero Defects, and Competitive Price

PART III Managing Simplicity

8. Visible Simplicity, Invisible Complexity: The Role of Information Technology

9. Integrating Simplicity Marketing into Brand and Product Strategy

10. The Bottom Line: Converting Customer Stress Relief to Shareholder Value

Endnotes

Index

About the Authors

Acknowledgments

I AM INDEBTED to many for enabling this book. First, my thanks to Frank Cespedes at the Center for Executive Development for his wisdom, encouragement, and early feedback on the concept of Simplicity Marketing. My thanks to Carolyn Neal for her role in publishing our original article on which the book is based. I am also grateful to Professor Kevin Lane Keller at Dartmouth College—both for his guidance in leading me to The Free Press with this project, and for the inspiration provided by his extraordinary book, Strategic Brand Management.

Special thanks to Bob Wallace, senior editor at The Free Press, for his enthusiasm about the project from day one. It has been a privilege to have the benefit of Bob’s vast experience from editing many of the business books that I have most respected over the years. Anne-Marie Sheedy at The Free Press was also a pleasure to work with as she helped bring the project to conclusion in a multitude of ways. Giorgio Stenner, my research assistant, provided diligent support in excavating data to augment, and sometimes modify, my judgment. Tracy Barrett provided the computer graphics to help our readers visualize strategies and ideas.

Among the many who helped bring the book’s examples to life, I’d especially like to thank Ralph Drayer and Allen Olivo for being so giving of their time. Thanks also to Mark Nielsen and Lynn Upshaw for their invaluable counsel and insights along the way. Finally, I want to deeply thank Elaine and Stephanie, my wife and daughter, for seeing me through, and my trusted friends Lee Franklin and David Brandt for their moral support in my decision to undertake this book at a very busy and challenging time.

—Steven M. Cristol

Introduction

LIKE CAPITALISM ITSELF, contemporary marketing has been based on an unflagging belief in giving customers more and more choices. The choice curve ramped up in the post-World War II economy, when packaged goods manufacturers set in motion a relentless juggernaut of product proliferation and line extensions. The cumulative result of a half century of bombarding customers with an overload of options is that their mental circuit breakers are beginning to trip—in both the consumer and business worlds. In a pressure-packed buying and selling environment, the line between choice and overchoice has become increasingly fine.

By the early 1970s, marketers were already desperately hungry for ways to ensure that their brands could stand out amidst the swelling marketing noise created by more choices and more media pervasiveness. It was then that the concept of positioning rippled through the marketing world. Positioning focused on the importance of differentiating a product, service, or company from its competition. It brought to the marketing planning process a new sense of focus on carving out a proprietary space in the customer’s mind. During the three decades since, sustained success has come to those brands with a unique, relevant, and credible positioning consistently supported by aggressive marketing.

But many such successes are now threatened by overchoice. A new imperative for the positioning discipline has emerged: that marketers look for ways to connect their brands to simplicity. The interaction of two forceful tides—extreme choice proliferation and an exponentially increasing pace of change—creates a combustible combination that at once brings customers unprecedented opportunities and unprecedented anxiety. This book hypothesizes that, in the most developed economies of the twenty-first century, the next generation of positioning successes will belong to those brands that relieve customer stress. That means simplifying customers’ lives or businesses in ways that are inextricably tied to brand and product positioning. It means becoming the customer’s partner in stress relief.

Brands that do this will be the customer’s heroes. Brands that don’t will be nuisances.

Since the authors’ initial published work in this arena appeared in Marketing Management (American Marketing Association) in 1996, much has been written about simplification. In concept, addressing simplicity in marketing might seem fairly straightforward, intuitive, and not exactly rocket science. But if you have ever tried to build a credible brand positioning strategy on simplification, you already know that it is much easier said than done. A strategic framework is needed—a framework that provides a new set of filters through which products and brands can be passed to distill the kernels of simplicity that will reduce customer stress.

Simplicity Marketing is that framework. With Simplicity Marketing, choice and innovation need not incrementally clutter the customer’s mind but can instead be positioned to de-clutter it. As the rhythms of innovation further compress and customer demand for stress relief continues to grow, this de-cluttering will translate to stronger sales, customer loyalty, brand equity, and competitive advantage.

This book is divided into three parts. Part I examines the impact of customer stress on the buying and selling environment and introduces foundational concepts for understanding it and addressing it as marketers. Part II provides a suite of stress-reducing strategies that are the linchpins of effective Simplicity Marketing. It then explodes those strategies into their actionable components. Part III is a guide to managing simplicity strategies, leveraging information technology, and integrating all the tools in this book into an executional blueprint. Finally, it explores the linkages between customer stress reduction, brand equity, and shareholder value.

Simplicity Marketing also aims to help you evaluate the significance of trends, and to do so before your competitors. For example, after you read it we believe you will see why those who were late to grasp the strategic impact of the Internet would have likely grasped it earlier in a Simplicity Marketing context.

If you are a marketing strategist, we hope you will use the book as an action-oriented handbook. If you are a senior executive presiding over marketing, or the CEO of a marketing-oriented company, we hope you will use it to help rethink your company’s fundamental relationship with your customers—and how making those relationships less stressful can enhance shareholder value. And if you are a marketing academic, market researcher, or consumer psychologist, we hope you will use it to challenge those existing methodologies that overchoice is rendering less and less effective.

A final note on using the book: Although we recognize that, in some industries such as consumer packaged goods, customer means trade customers and not consumers, throughout the book we have used the word customer to be inclusive of both consumers/end users and distribution channel customers. Simplicity and stress are not unique to either the consumer or business-to-business marketplaces, and customer is the only word broad enough to encompass both.

The mission of Simplicity Marketing is to facilitate value-creating brand and product strategies. We also hope to ignite the debate about the merits of choice proliferation versus choice simplification. Though we are not alone in having identified the hunger for simplicity as the underpinnings of a watershed marketing trend, we have tried with this book to both illuminate that trend and bring discipline to leveraging it. Our best hope is that by mixing your talents with the concepts presented here, we can produce an alchemy that makes your customers’ lives easier, fortifies your brand, and strengthens your company’s financial performance.

—Steven Cristol and Peter Sealey

PART I

The Buying and Selling Environment in the Digital Age

Chapter 1

Too Much Choice

In the three short decades between now and the twenty-first century, millions of ordinary, psychologically normal people will face an abrupt collision with the future.

—ALVIN TOFFLER, opening statement, Future Shock, 1970

DEVELOPED ECONOMIES were largely built on proliferation of choices. The notion of more is better became genetic code among twentieth-century consumers growing up in these economies. Now, with each passing day, more and more of these same consumers find that they have run headlong into a wall. The wall is their manageable threshold for the sheer number of decisions they are being asked to make, and they are throwing their hands up in despair. But in this frustration is a win-win opportunity to de-stress customers and, in so doing, to build brand equity and shareholder value.

How did we get to a consumer world of 40,000 products in a supermarket, hundreds of long distance and cellular calling plans, 52 versions of Crest toothpaste, magazine ads that show 37 available configurations of a Dodge Caravan on a single page, and the distribution of a thousand coupons per human being each year in the United States? How did we get to a business world confronted by more than 200 different brands of conference room chairs, 225 different models of mobile phone handsets, and 100-plus brands of desktop and laptop computers—all marketing for mindshare above the daily din of the purchasing manager’s voice mail and e-mail messages? Can the human brain sustain its ability to cope with such overwhelming choice in an age of a networked economy, higher productivity expectations, and shrinking leisure time? Is the resulting level of customer stress really such a big deal?

You bet it is.

■ Digital-Age Stress: A Day in the Life

To glimpse how radically purchase decisions have changed since publication of Alvin Toffler’s seminal Future Shock in 1970, one only needs to peer into the digital-age lives of two people who could be your customers. Meet John Braxton and Lucy Chavez. John is a middle manager in a Fortune 500 company, the father of first-and fourth-grade children, and the husband of a real estate broker who works long hours. (John’s wife is among the ranks of 75% of U.S. wives under age 65 who work—compared to less than 40% in 1970.) Lucy is a thirty-something superstar director of information systems at one of the world’s largest banks; her career has been all-consuming, and she hasn’t yet had time for marriage or family (though lately she’s been all too aware of the ticking of her biological clock).

Note that neither John nor Lucy, though technologically savvy, are bleeding-edge early adopters of new technologies in their personal lives. Like so many readers of this book, they are users of mainstream digital-age technologies like voice mail, cell phones, e-mail, and the Internet, but have not yet plunged deeply into the post-PC world of information appliances. So as you read about their day, remember that still awaiting them in the short-term future is the prospect of learning about and sorting through the burgeoning milieu of home computer networks, digital VCRs, portable Internet music players, wireless Web tablets, wristwatch phones, smart picture frames, networked washing machines, personal portable bar code scanners, and the next generation of handheld organizers. Forgetting for a moment that the post-PC world will bring even more clutter and confusion into the picture, let’s first look in on John’s day.

Before leaving to drive the kids to school on the way to his office, John has only a few minutes to glance at the morning paper while standing at the kitchen counter to wolf down some breakfast cereal. Seeing the business section reminds him that he really ought to invest that $7,000 bonus check he received over the holidays. He doesn’t have time to evaluate individual stocks or bonds, so he’s been thinking about mutual funds as a simpler approach. Today’s newspaper happens to have an article on mutual funds, reporting on the fact that there are now more than 13,000 funds worldwide to choose from. Thirteen thousand! John had no idea, and suddenly what he thought would be an easy way out seemed formidable. What he had hoped could reduce his anxiety had just produced more. (Mutual funds, originally known as investment trusts, have been around for more than a century in the United Kingdom and nearly 80 years in the United States. Yet as recently as 1970, even with all that evolution, there were still only about 500 open-end funds to choose from compared to today’s 13,000-plus.)

At the office, John overhears his assistant making airline reservations for his trip to London next month for a trade show. He rushes out from behind his desk to say, "Wait! Let me check my frequent flier miles before you commit to an airline. I think I’m close to a free ticket to Hawaii with either Delta or United, but I can’t remember which. And one of them is having that big bonus miles promotion right now on overseas flights. You’ll have to call them back after I log onto the Web and check my mileage plan account balances. (When Future Shock was published, there were no frequent flier programs. American Airlines launched the first in 1980.)

At lunch, John and a colleague only have enough time to run across the street to McDonald’s. The menu board fills the wall with Value Meals, Chicken McNuggets with a choice of four sauces, Arch Deluxe with or without bacon, Happy Meals with action toys, two kinds of fish filet sandwiches and two kinds of chicken, fat-free Apple bran muffins, multiple salads with multiple dressings, and a host of additional menu variations. The number of choices is sufficiently incomprehensible that John hears himself ordering a number 2 Value Meal even though he doesn’t really want or need the large order of fries that comes with it. (When Future Shock was published, fast food also implied uncomplicated. McDonald’s 1970 menu board was certainly uncomplicated compared with its nearly 60 different items in 1999—not counting nine Value Meal combinations. In contrast, the thriving and popular regional Los Angeles-based In-N-Out Burger chain still had the same menu in 1999 as in 1988; just burgers, cheeseburgers, fries, drinks, and shakes—not that different from McDonald’s 1970 menu.)

After lunch, John’s assistant reminds him that today is the enrollment deadline for choosing an HMO in the company health plan, now that Human Resources has added more options for next year with different coverages and different levels of co-payment. (When Future Shock was published, John’s company was simply telling employees, Here is your health benefits package. Your coverage is with ABC Insurance. No HMOs, no co-payments.)

Before leaving the office, John picks up a voice message from his wife asking him to stop at the supermarket to pick up a few simple items to get the family through to the weekend: orange juice, bagels, Philadelphia cream cheese, Crest toothpaste, Coke, and some fresh lettuce for salads. John enters a Safeway supermarket on his way home; it contains about 37,000 different products with distinct SKUs (stockkeeping units).1 Inside the store, his little 2-inch Post-It Note-size shopping list becomes a 25-minute obstacle course as it explodes into more than 250 choices for only those six items on his list. (In 1970, the same six items combined offered just over 50 choices. The average supermarket contained only about 8,000 SKUs; the approximate number of new grocery product introductions in the United States was 800 in 1970, compared to more than 11,000 in 1998.) Table 1.1 shows a comparison of what John sees this evening, compared to what might have been a typical 1970 selection.

■ Table 1.1

John finally gets to the checkout counter, only to be asked, Do you have your Safeway Club card? Do you want paper or plastic bags this evening? Credit card or debit card?

Home at last, John is putting the groceries on the counter next to a large bowl of fresh fruit when he notices the stickers on the bananas are carrying button-size micro-ads for ABC Television. The phone rings.MCI WorldCom is calling to tell him about a new long distance calling plan that is only available to customers of John’s bank. With his and his wife’s combined income and credit history, they qualify for a Platinum Visa card. The telemarketing rep tells John that if he moves his long distance service from Sprint to MCI and fills out an application for the Platinum Visa before a certain date, he will qualify for a preferred-customer lower APR on his Visa and for MCI’s special Platinum calling plan. He responds, Sorry, I can’t deal with this now. (In 1970 there was only one class of BankAmericard before it later became Visa, one class of Master Charge before it later became MasterCard, and one class of American Express until it launched an exclusive Platinum card in 1983). For consumers at the end of the ’90s, cards were regular, Gold, and Platinum Visa and MasterCard, branded not only by banks but co-branded as well, plus a Titanium Visa, plus American Express’s 20+ options (green, gold, platinum, Optima, Optima Grace, etc.). Together they accounted for the lion’s share of nearly 4 billion mail and phone credit card solicitations a year in the U.S. Visa estimates that in the U.S. alone, beyond single-bank cards there were co-branded Visa cards bearing more than 6,000 different brand names by 1999. (And relative to the call John just answered, in 1970 there was only one long distance provider—AT&T—and no packaged calling plans; today there are nine brands of long distance service available in his area, each with its own spin on calling plan options and pricing.)

One reason John couldn’t deal with that call was because he had just spent two grueling hours the previous evening trying to figure out the best solution for upgrading his wireless phone service from his old analog cellular to digital PCS—until the formidable tangle of handset features and battery types, pricing plans, calling areas, and special promotions from six different wireless carriers in his area finally led him to conclude, I’ll just keep what I have. (According to a 1998 Wirthlin Worldwide/Ameritech survey, 86% of consumers interested in wireless phone service said they were confused by the choices.)

After dinner, John quickly shuffles through the stack of today’s 13 pieces of mail on the table. He notices a Gateway Computer ad on the back cover of PC World magazine. This single page ad contains five logos: Gateway’s, the Intel Inside logo, the PC Magazine Editor’s Choice seal, Pentium III, and Microsoft Windows. (The clutter of ingredient branding barely existed in consumer markets in 1970 beyond Dolby in stereo and DuPont’s pioneering ingredient brands like Teflon and Lycra. But after NutraSweet and Intel in the ’80s, the floodgates opened and today we have countless ingredient brands splattering their logos on the advertising, packaging, and promotional materials of countless host brands. Sometimes we now see even three layers of branding on the same product. One new personal TV receiver, for example, carries the Philips brand name alongside both the TiVo brand name (the company that licenses its personal TV service and technology to Philips) and the Quantum Quick-View brand name (the branded enabling storage technology). The consumer buys a box with three brands emblazoned on it, all vying for mindshare even as they endorse each other.)

On his way to the trash can to throw away the plastic bag that the evening paper came wrapped in, John puts the discardable mail in the paper recycling container and the empty bottles from dinner in the glass recycling container. Later he’ll put yesterday’s newspaper in the separate newspaper recycling container. (In 1970, in the house that John grew up in, his parents didn’t think about recycling—much less using separate containers for sorting different materials every day—so everything John just now did would have been one simple trip to the trash can. Today’s scenario is certainly progress, but like many other forms of progress has mental clutter consequences.) John then remembers that tomorrow evening he needs to get some new tennis shoes before this weekend’s tournament, so he reaches for the Yellow Pages—only to be faced with a choice between the GTE Everything Pages and the Pacific Bell SMART Yellow Pages. (In 1970, there was only one Yellow Pages brand per market in most U.S. markets. Some now have four different brands distributed to the same household.)

When the kids are finally in bed, John and his wife decide to unwind by vegging out in front of the TV for a little while. John flips on the remote to see the TV Guide Channel’s scrolling list of what’s on—on the nearly 300 channels they now get via digital cable. After using up 10 minutes of TV watching time just to sort through some of the choices, John sees that the year’s first Monday night football game is on. But his wife thinks that the 1,050 hours of football programming available on ESPN alone this season (not counting the previously broadcast games on ESPN Classic) should provide enough choices for John without her having to watch a game on a work night. (After all, the traditional fall football season we faintly recall from 1970 now stretches to six months from early-August preseason opener to the early-February Pro Bowl, overlapping with the extended seasons and expanding leagues of other professional sports to create exponentially more event choices in any given week than ever before.) So John’s wife opts instead for a CBS special on stress reduction. During that hour of prime time, 47 commercial/nonprogram messages run—not including a one-second commercial for Master Locks—the broadcast equivalent of the banana sticker micro-ads mentioned earlier. (In 1970, there were four TV channels in the average U.S. market. Today’s fragmentation of programming explains why Seinfeld, the top-rated sitcom of the ’90s, drew only one-third the audience of The Beverly Hillbillies, a top-rated sitcom of the ’60s. The average number of commercials in a 1970 prime time hour was 16, less than half of today’s number.) Forty minutes later, John has fallen asleep sitting up.

The next morning, in another city on the opposite U.S. coast, Lucy Chavez wakes at 5:15. She feels